The Toronto stock market was little changed late morning Tuesday as the latest developments in Italy discouraged buyers.

The S&P/TSX composite index slipped 2.63 points to 12,459.35 after the government of Italian premier Silvio Berlusconi won an important budget vote. The result left him without a majority in parliament, leaving investors unclear whether the country can weather a growing debt crisis.

The TSX Venture Exchange was up 5.06 points at 1,666.98.

The Canadian dollar was lower, down 0.1 of a cent to 98.65 cents U.S.

U.S. markets also lost early momentum, with the Dow Jones industrials down 49.5 points at 12,018.89, the Nasdaq composite index lost 10.37 points to 2,684.88 and the S&P 500 index slipped 4.35 points to 1,256.77.

Following the vote, on a routine measure to approve the 2010 state budget, the opposition immediately demanded that Berlusconi step down to calm the bond markets.

Political uncertainty in the eurozone's third-largest economy rocked financial markets for yet another day and Italy's borrowing rates spiked to their highest level since the euro was established in 1999.

The yield on Italy's 10-year bonds jumped as high as 6.74 per cent before settling down to 6.7 per cent. A rate of over seven per cent is considered unsustainable and proved to be the trigger point that forced Greece, Ireland and Portugal into accepting financial bailouts.

“That's the market telling you that what is in place right now, the market does not have enough confidence in it to succeed going forward,” said Gareth Watson, vice-president at Richardson GMP Ltd.

“And that's why people want to see some fresh blood.”

Berlusconi's government has been under intense pressure to enact quick reforms to shore up Italy's defences against Europe's debt crisis.

However, there are big doubts as to whether Berlusconi is up to the job of enacting the tough austerity measures that markets demand.

With debts of around $1.9-trillion (CAN), Italy is considered by many as being too big for Europe to bail out, like it has already done for Greece, Portugal and Ireland.

The base metals sector gained almost two per cent as the December copper contract lost early gains and was unchanged at $3.54 (U.S.) a pound. Teck Resources was ahead 65 cents at $39.96 (CAN) and Ivanhoe Mines gained 40 cents to $22.92 (CAN).

The financials sector was ahead 0.3 per cent with Royal Bank ahead 25 cents to $46.25.

Oil prices moved higher with the December contract on the New York Mercantile Exchange up 74 cents to $96.26 (U.S.) a barrel.

Helping to sustain crude prices were expectations that a report to be released Wednesday by the International Atomic Energy Agency is likely to contain evidence about Iran's nuclear weapons program.

Analysts note that such evidence could increase the risk of an attack on Iran's nuclear facilities.

Commodities have also rebounded in recent weeks on signs that the U.S. economy has avoided a recession this year.

The TSX energy sector was little changed as Suncor Energy declined five cents to $33.21 (CAN) and Imperial Oil was up 16 cents at $42.52.

The industrials sector was ahead 0.26 per cent while Bombardier Inc. advanced 10 cents to $4.35.

Meanwhile, a senior government official said that Greece will get a new prime minister later Tuesday.

Talks between current Prime Minister George Papandreou and opposition leader Antonis Samaras have dragged into a second day as they try to hammer out a power-sharing deal. The two agreed over the weekend to forge an interim government that will shepherd the country's new $130-billion (CAN) European rescue package through Parliament.

Without the deal, Greece would go bankrupt.

European bourses were also off session highs as London's FTSE 100 index gained 1.29 per cent, Frankfurt's DAX rose 1.01 per cent and the Paris CAC 40 was up 1.63 per cent.

In earnings news, Uranium One Inc. had a profit of $45.8-million in the third quarter, a big improvement from a year ago loss of $44.8-million, as it more than doubled revenue compared with the same time last year. Its shares gained five cents to $2.84.

TMX Group's net income increased 21 per cent in the third quarter to $67-million, helped by stronger derivatives trading, clearing and both listing and information services. Revenue in the quarter was $167.8-million, up 15 per cent from the third quarter of 2010 and its shares gained nine cents to $44.44.

Shares in Finning International Inc. were off 29 cents to $23.51 as the heavy equipment dealer reported earnings of $35-million or 21 cents a share in its latest quarter. That is down from $63-million a year ago as the company was hit by costs related to a new parts system. Finning missed analyst estimates of 26 cents a share.

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